diff --git a/refs.c b/refs.c
index 9db66e9955..90bcb27168 100644
--- a/refs.c
+++ b/refs.c
@@ -1109,8 +1109,10 @@ int ref_transaction_create(struct ref_transaction *transaction,
 			   unsigned int flags, const char *msg,
 			   struct strbuf *err)
 {
-	if (!new_oid || is_null_oid(new_oid))
-		BUG("create called without valid new_oid");
+	if (!new_oid || is_null_oid(new_oid)) {
+		strbuf_addf(err, "'%s' has a null OID", refname);
+		return 1;
+	}
 	return ref_transaction_update(transaction, refname, new_oid,
 				      null_oid(), flags, msg, err);
 }
diff --git a/t/t5605-clone-local.sh b/t/t5605-clone-local.sh
index 7d63365f93..21ab619283 100755
--- a/t/t5605-clone-local.sh
+++ b/t/t5605-clone-local.sh
@@ -141,4 +141,13 @@ test_expect_success 'cloning locally respects "-u" for fetching refs' '
 	test_must_fail git clone --bare -u false a should_not_work.git
 '
 
+test_expect_success 'local clone from repo with corrupt refs fails gracefully' '
+	git init corrupt &&
+	test_commit -C corrupt one &&
+	echo a >corrupt/.git/refs/heads/topic &&
+
+	test_must_fail git clone corrupt working 2>err &&
+	grep "has a null OID" err
+'
+
 test_done